Crude fell, trading near its lowest level in four months amid speculation that risks to the U.S. and European economies will restrain demand while supplies increase.
West Texas Intermediate futures, little changed this week, may decline next week on concern that Europe’s debt crisis will reduce economic growth and fuel demand, a Bloomberg survey showed. OPEC cut forecasts for demand for its crude next year and said that it decreased production last month. WTI plunged to $84.44 a barrel on Nov. 7, its lowest close since July 10, after U.S. crude inventories rose for the fourth time in five weeks.
“The potential to the downside is higher than to the upside,” said Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich. “There is still the chance of sliding into a mild recession, and the oil market is quite saturated with supply.”
West Texas Intermediate crude for December delivery dropped as much as 86 cents, or 1 percent, to $84.23 a barrel in electronic trading on the New York Mercantile Exchange, and was at $84.32 at 1:09 p.m. London time. Prices are down 15 percent this year.
Brent for December settlement declined 74 cents, or 0.7 percent, to $106.51 a barrel on the ICE Futures Europe exchange. The European benchmark crude was at a premium of $22.18 to New York-traded WTI.
OPEC will need to provide an average of 29.7 million barrels a day in 2013, 1.25 million less than it’s currently pumping, and 100,000 a day less than it forecast a month ago, the group said in a report today.
Supply from the Organization of Petroleum Exporting Countries dropped by 0.2 percent to 30.95 million a day in October, the lowest since last December, because of declines in Nigeria, Iran and Saudi Arabia, the report showed.
Nineteen of 33 analysts and traders, or 58 percent, forecast WTI futures will decrease through Nov. 16. Seven respondents, or 21 percent, predicted that futures will gain and seven said there will be little change in prices.
Euro-area finance ministers may not make a decision on unlocking 31.5 billion euros ($40.1 billion) of aid for Greece until late November, a European Union official said yesterday. Finance chiefs will wait for a full report on the country’s compliance with the terms of its bailout, the official said on condition of anonymity because the deliberations are private.
Crude in New York is in a downtrend channel on the daily chart, signaling price advances may not be sustainable, according to data compiled by Bloomberg. Futures have traded between the middle and lower Bollinger Bands for the past seven weeks. The indicators, representing technical resistance and support levels respectively, are at about $88.70 and $83 a barrel today.
U.S. crude supplies increased 1.77 million barrels to 374.8 million barrels last week, the Energy Department data showed.